The global economy is on the recovery tracks with respect
to the uncertainty of trade conflicts
Taiwan's economic outlook seems promising for the time being

The Taiwanese Economy in May 2018

The global economic growth remains strong, and the recovery is
on the right track with respect to the only and biggest uncertainty,
potential conflicts in trade between the US and its trading partners.
Nevertheless, fueled by the global conditions, Taiwan's economic
outlook seems like very promising for the time being.
Taiwan's exports in May 2018 increased significantly by 14.16% compared
with the same month of 2017. Regarding imports, Taiwan's imports
in May 2018 increased by 12.03% compared with imports in May 2017.
Exports and imports grew by 11.24% and 9.94% y-o-y respectively
from January 1st till the end of May this year, Taiwan's exports
and imports gave a trade surplus of US$ 20.34 billion or an increase
by 19.21% on a y-o-y basis for the first 5 months of this year.
Taiwan's consumer price index (CPI) stood at 1.64% in May 2018 compared
with the same month of previous year. The core inflation rate stood
at 0.95% in May, 2018. In addition, the wholesale price index (WPI)
moved up by 5.61% in May 2018 on the year-on-year basis. On the
cumulative basis, the CPI went up by 1.66% and WPI went up by 1.53%
from January 1st till May 31st 2018 compared with the same period
last year.
As for exchange rate, the NTD went weaker due to the relatively
stronger USD, as the Fed had sent out its certain hawkish messages
and hot money continued to flow out. Anyway, the NTD/USD stood at
29.98 in late May 2018 indicating a 1.27% depreciation. Regarding
the interest rate, it remained low and steady in May 2018 due to
the continued loose monetary operations by the CBC with respect
to the most recent CPI reading and potential global uncertainties;
the lowest and highest over-night call rate in May 2018 stood at
0.179% and 0.192% respectively.

Business Outlook

The portion of manufacturing firms who perceived business were
better than expected in the target month was 37.4% or increased
by 8.0 percentage points compared with respondents who perceiving
better business in the previous month. The portion of those perceived
business were getting worse in the target month was 11.6% or decreased
by 14.9 percentage points than 26.5% perceiving worse business of
the previous month. The portion of manufacturing firms who perceived
business remained constant in the target month was 51.0% or increased
by 6.9 percentage points compared with 44.1% perceiving constant
business in the previous month. Overall, manufacturing firms perceived
the business in the target month was rather optimistic.
In addition, the portion of manufacturers who perceived business
would be better in the next six months was 31.0% in the target month
or decreased by 3.8 percentage points than 34.8% feeling more optimistic
about the future in the previous month. The portion of firms who
perceived the economic outlook would be worsening was 10.5% or decreased
by 2.1 percentage points compared with 12.6% feeling rather pessimistic
about the future in the previous month. The portion of manufacturing
firms who perceived business remained constant in the next six months
stood at 58.4% or increased by 5.8 percentage points compared with
52.6% feeling neutral about the business outlook one month earlier.
Overall, manufacturing firms perceived the business in the near
future was somewhat neutral.
The manufacturing composite indicator for May, 2018 adjusted for
seasonal factors on moving average, saw an upward correction, and
from a revision of as 98.33 points in April moved up to 101.69 points
in May Figure 1 shows an increase of 3.36 points, the first increase
after previous decline.
The TIER service sector composite indicator for May, 2018 adjusted
for seasonal factors on moving average, also however saw an upward
correlation, and from a revision of as 95.01 points in April moved
up to 96.9 points in May. Figure 1 shows an increase of 1.89 points,
a consecutive three-month increase.
In addition, the TIER Construction Sector Composite Indicator for
May 2017 adjusted for seasonal factors on moving average nevertheless
saw a downward correction, and from a revision of 95.22 points in
April went down to 94.89 points in May. Figure 1 shows a decrease
of 0.33 points, a fourth month consecutive decline.

Forecast on Individual Industries

Following are manufacturers' sentiments that are industry-specific
in the monthly TIER surveys:

● Manufacturers' sentiments that have been in decline in the May
survey and are expected to deteriorate over the next six months
include:
None.

● Manufacturers' sentiments that have been in decline in the May
survey, but are expected to improve over the next six months include:
None.

● Manufacturers' sentiments that have been in decline in the May
survey and are expected to remain sluggish over the next six months
include:
Electrical Machinery, Supplies Manufacturing and Repairing.

● Manufacturers surveyed who felt the May outlook was the same as
the previous month, but the outlook is expected to exacerbate over
the next six months include:
Motor Vehicles Manufacturing, Telecommunication Services.

● Manufacturers surveyed who felt the May outlook was the same as
the previous month, but the outlook is expected to improve over
the next six months include:
Industrial Chemicals, Petrochemicals Manufacturing, Non-metallic
Mineral Products Manufacturing, Electrical Machinery, Communications
Equipment and Apparatus Manufacturing, Motorcycles Parts Manufacturing.